Even though Fed didn’t tone down the concern on inflation in the post FOMC meeting statement, dollar was sold off after May core PCE deflator showed further moderation in core inflation. Meanwhile, the Japanese yen had a volatility week, first rebounding strongly on risk aversion but then sold off sharply as carry trade came back,. The Japanese yen staged a strong broad based rebound last week, believed to be fueled by concern on risk of carry trades Comments from the Bank for International Settlements in its annual report that there was “clearly something anomalous” in the low-yielding yen’s recent decline is giving some to the yen. Sterling was also additionally supported by stronger than expected house price growth which saw Nationwide house price index rose 1. Most important economic data will be Friday’s employment report which is expected to show 128k job growth in Jun, slightly lower than prior 157k. Markets are building up expectation of another rate hike this week, after the unexpectedly tight 5-4 vote to keep rates unchanged in June. read more
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